The next general election in 2024 will see one-fifth of the workforce in higher or higher-rate tax brackets, putting more pressure on Rishi Sunak to lower taxes.
Pension experts at Lane Clark & Peacock think this will be more than three times what the Conservatives had when they took office in 2010.
“Hugely concerning” numbers are being led into greater taxes by senior Tories. According to Mr Sunak’s March 2021 Budget, until 2026 the higher-rate tax threshold of £50,270 will be fixed.
Personal allowances exempt from federal taxes were similarly frozen at £12,570. As many as 2.5 million new voters, according to Lane Clark & Peacock, will be sucked into 40% or additional 45% bands by 2024.
The combination of the Chancellor’s threshold freeze and rising salaries, exacerbated by inflation, is to blame for the rise in inequality. An all-time high of 6.78 million employees, according to the pension consulting firm, would have to pay higher pension rates by the year 2024.
Double the 2010 total, and 58 percent more than the previous general election in 2019’s total. Currently, 4.13 million people pay a higher tax rate of 40 percent, and another 440,000 pay a higher tax rate of 45 percent if they earn more than £150,000.
In Scotland, there are a variety of tax brackets. Inflation is expected to push more than 2.5 million taxpayers into 40 or 45 percent tax brackets, though only 800,000 will be affected.
Lane Clark & Peacock ex-expenses minister Steve Webb: “Freezing tax allowances and thresholds is the ultimate stealth tax.”
David Davis, a former Cabinet minister for the Tories, expressed alarm about the number of people being pushed into the highest tax bracket. He added: “It’s a real risk now that the party is going to lose its reputation for economic competence.”
Furthermore, Mr Sunak has said that he intends to reduce the rate of income tax by 1 percent in 2024.